By Paul Page

Today's newsletter was written by WSJ Logistics Report's Jennifer Smith.

The world’s second-largest warehouse owner wants to take its U.S. arm public. Singapore-based GLP has filed for an initial public offering that could value its U.S. business at more than $20 billion, the WSJ’s Liz Hoffman reports, in what would be the largest-ever IPO for a real-estate investment trust. The company is building an industrial property portfolio in a burgeoning market that’s gaining greater interest from investors. Surging e-commerce sales have stoked demand for warehouses as Amazon.com Inc. and others race to expand distribution networks. GLP has nearly 200 million square feet of U.S. warehouse space, second only to industry leader Prologis Inc. With the domestic industrial vacancy rate at 4.3%,
the lowest since 2002, GLP’s U.S. portfolio has drawn interest from potential buyers and the company could end up exploring a sale instead.

Streamlined freight rail networks appear to be speeding up profit growth. Norfolk Southern Corp. reported a 16% jump in quarterly operating profit as it moves to unclog rail yards and overhaul operations by running fewer, longer trains, the WSJ’s Paul Ziobro writes. Precision railroading was pioneered by the late rail executive Hunter Harrison, whose swift implementation of the strategy at rival operator CSX Corp. caused widespread initial service disruptions. Other U.S. railroads are taking a more deliberative approach, and Norfolk Southern, which operates in the Eastern U.S., is the latest to show the benefits. Trains ran 14% faster on its network and railcars spent 23% less time idling in terminals compared
to the first quarter of 2018. At Union Pacific Corp., streamlining yielded at least $500 million in cost savings, and fewer cars on the tracks made it easier to recover from bad weather and flooding this winter.

Infrastructure

Artificial intelligence could be coming to a highway near you. Businesses that build and maintain critical freight infrastructure are testing the use of machine learning and computer vision tools to predict when roads, bridges and tunnels may need repair, the WSJ’s Jared Council reports. Companies including Sund & Baelt Holding A/S of Copenhagen and Kawasaki Geological Engineering Co. of Tokyo are using those technologies to analyze data from infrastructure sensors and cameras. The goal is to prevent major structural failures and limit costly human inspections. Sund & Baelt says using AI to prompt preventive repairs could lower maintenance costs by 10% over the next four years. But the switch from
spreadsheets means big shifts in how businesses manage data and careful training to teach machine learning systems to accurately identify potential sinkholes or cracks in bridge concrete.

Transportation

Boeing Co. could take a more than $1 billion hit from the grounding of its 737 MAX. The aerospace giant doesn’t know when the best-selling plane will return to service, the WSJ’s Doug Cameron and Andrew Tangel write, and executives are defending Boeing’s development process even as analysts estimate the crisis could cost the company as much as $3 billion. The grounding of the planes following two fatal crashes has forced carriers to cancel flights and rejigger schedules ahead of the busy summer travel season. Boeing has scaled back production, and its additional MAX-related costs include higher plane-production expenses. Some analysts expect payouts to airlines and suppliers could triple the bill, while
lowered output means European rival Airbus SE will likely surpass Boeing to become the world’s biggest plane maker at the end of this year.